Iger hopes to taper discounts next year

Disney resorts

December 10, 2009|By Jason Garcia, Orlando Sentinel

The top executive at the Walt Disney Co. said Wednesday he expects his company's theme parks will scale back their discounts during the second half of 2010, though he acknowledged that "we don't know when we will essentially be able to turn it off."

Disney Chief Executive Officer Bob Iger noted that the promotions Disney's parks now offer -- including another buy-four-get-seven hotel-night offer at Walt Disney World -- are slightly smaller than the deals offered earlier this year, when the recession was at its worst.

"We'll be able to continue to dial that back over the latter part of 2010," Iger told analysts at the UBC Media and Telecommunications Conference in New York.

Since the beginning of this year, Disney has used a series of deep discounts at its theme-park resorts -- on hotel rooms, food, tickets and more -- to keep attendance afloat amid an overall slump in travel and tourism. While the company has relied on promotions to prop up attendance during previous downturns, it has not before used them for such an extended period of time.

The strategy has kept Disney World and Disneyland in Anaheim, Calif., full, which Disney executives say helps ensure continued word-of-mouth marketing and leads to return trips. But the discounts have also eroded margins: Operating profit at Walt Disney Parks and Resorts sank 25 percent during the 2009 fiscal year, which concluded Oct. 3.

Some analysts have expressed concern that the strategy may lead to a permanent expectation of discounts among Disney customers, which would make it difficult for the company to resume charging full price without hurting park attendance. Some also worry that the promotions have simply cannibalized future attendance by luring now people who were planning to take trips later.

Iger, as he has before, dismissed both concerns Wednesday. He said, for example, that the promotions have attracted new customers who would not otherwise have visited a Disney park.

"We're not concerned about weaning ourselves and the marketplace of the discounts," he said.

Still, Iger would not predict when Disney might be able to drop its discounts entirely. Tourism-industry experts are watching for indications that Disney is pulling back on its promotions, as a likely sign of improvement in the broader travel market.

Iger said it is difficult to make long-term predictions right now because travelers are not planning trips far in advance. "Visibility well into the year is very limited," he said of 2010. "It's just not a market that lends itself to long-term commitments or early buying."